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Item 2. Management’s Discussion and Analysis

2026-05-06 compared with 2025-11-06 · 194 added, 275 removed, 116 unchanged (80% of the section changed)

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We use a scaled platform to innovate as a trusted partner with our clients, solving problems to increase their efficiency and effectiveness across a broad range of channels.

We report financial results for the following three reportable segments.

Through our Branded Services segment, which generated approximately 29.6% and 35.3% of our revenues in the three months ended March 31, 2026 and 2025, respectively, we provide services to branded consumer goods manufacturers through three main categories:

brokerage, branded merchandising and omni-commerce marketing services.

Through our Experiential Services segment, which generated approximately 44.3% and 38.2% of our revenues in the three months ended March 31, 2026 and 2025, respectively, we help brands and retailers reach consumers and convert shoppers into buyers through in-store and online sampling and demonstrations.

Through our Retailer Services segment, which generated approximately 26.1% and 26.5% of our revenues in the three months ended March 31, 2026 and 2025, respectively, we provide end-to-end advisory, retailer merchandising and agency services to retailers.

Our quarterly results are seasonal in nature, with the fourth fiscal quarter typically generating a higher proportion of our revenues than other fiscal quarters, as a result of higher consumer spending.

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The timing of our clients’ marketing expenses, associated with marketing campaigns and new product launches, can also result in fluctuations from one quarter to another.

We report financial results for the following three reportable segments:

Through our Branded Services segment, which generated approximately 33.5% and 36.8% of our revenues in the nine months ended September 30, 2025 and 2024, respectively, we provide services to branded consumer goods manufacturers through three main categories:

brokerage, branded merchandising and omni-commerce marketing services.

Brokerage services is primarily an outsourced sales and services agency for branded consumer goods manufacturers at retailer headquarters, in-store and online.

Additionally, we lead with insights to execute branded merchandising strategies for branded consumer goods manufacturers related to merchandising in-store and online to drive product sales.

Our omni-commerce marketing services primarily relate to digital and field marketing services, including shopper marketing, targeted advertising, interactive design and development, inventory management, application development and content management solutions.

Through our Experiential Services segment, which generated approximately 39.8% and 36.3% of our revenues in the nine months ended September 30, 2025 and 2024, respectively, we help brands and retailers reach consumers and

convert shoppers into buyers through in-store and online sampling and demonstrations.

We manage highly customized, large-scale sampling programs for leading brands and retailers.

We also manage, organize and execute special events for brands and retailers, including large-scale meetings, mobile tours, summits and festivals.

Through our Retailer Services segment, which generated approximately 26.7% and 27.0% of our revenues in the nine months ended September 30, 2025 and 2024, respectively, we provide end-to-end advisory, retailer merchandising and agency services to retailers.

Advisory services primarily consist of consulting services related to private brand development, including coordination related to the sourcing, manufacturing, branding and distribution of private label products to the end retailer.

Retailer merchandising services primarily relate to the execution of merchandising strategies, including traditional services such as interior store construction, store resets, category updates and new item implementation.

Agency services primarily consist of providing marketing strategies within retail locations, including retail media networks, and analyzing shopper behavior to offer planning, execution and measurement of insight-based, retailer-specific promotions that target retailers’ specific shopper base to drive product sales.

Recent Developments

Refinancing .

During the first quarter of 2026, we completed a refinancing designed to extend maturities, enhance liquidity, and simplify our capital structure.

The transaction was effected through a series of interrelated financing actions, comprising (i) an exchange offer and consent solicitation with respect to our outstanding senior secured notes,

(ii) a refinancing and amendment of our term loan facility, and (iii) amendments to our asset‑based revolving credit facility.

Collectively, these actions extended the weighted-average maturity of our term debt, senior secured notes, and revolving credit facility by approximately two years and were accompanied by a $131.3 million principal paydown during the quarter, reflecting our ongoing commitment to deleveraging the balance sheet.

See Note 4– Debt – Refinancing in the Notes to the Company’s condensed consolidated financial statements.

Divestitures .

Consistent with our strategy to focus the portfolio on markets where we have differentiated capabilities, we entered into a series of agreements to reduce our ownership interest in our European joint venture.

Under those agreements, we sold a portion of our interest in the joint venture for total consideration of £20 million (approximately $28 million), comprised of £10 million (approximately $14 million) received in cash at closing and £10 million of deferred consideration.

The Company retained a minority interest of 49.6% in the remaining portion of its ownership interest in the European joint venture.

Year-over-year comparisons are affected by divestitures completed after the first quarter of 2025.

The divested businesses contributed approximately $5 million of revenues and $3 million of adjusted EBITDA to our first quarter 2025 results, which are not reflected in the first quarter of 2026.

Transformation .

Also during the first quarter of 2026, we advanced our transformation strategy by initiating a restructuring of our Branded Services segment and transitioning certain back-office functions to a third-party service provider.

These actions resulted in $2.2 million of restructuring charges in the quarter.

The transition of services to the third-party provider is expected to be completed in 2027.

Executive Summary

Three Months Ended September 30,

Change Reported

Nine Months Ended September 30,

Three Months Ended March 31,

Change Reported

(amounts in thousands)

Operating income (loss) from continuing operations

Net income (loss) from continuing operations

Adjusted Net Income (1)

Operating income (loss)

Adjusted Net Loss (1)

Adjusted EBITDA (1)

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Retailer Services

Adjusted EBITDA from Continuing Operations

(1) Adjusted Net Income and Adjusted EBITDA from Continuing Operations are financial measures that are not calculated in accordance with GAAP.

For a discussion of our presentation of Adjusted Net Income and Adjusted EBITDA from Continuing Operations and reconciliations of Net income to Adjusted Net Income and Adjusted EBITDA from Continuing Operations, see “ Non-GAAP Financial Measures .”

The Company reported net income of $20.6 million in the third quarter of 2025, compared to a net loss of $37.3 million during the same period last year.

This positive shift was primarily supported by a strong performance in our Experiential segment primarily driven by strong demand and execution, reduced selling, general, and administrative expenses, a one-time gain from divesting an equity stake in a foodservice business, and favorable tax legislation.

While these results are encouraging, they were tempered by declines in the Branded and Retailer segments.

Adjusted EBITDA was $99.6 million for the third quarter of 2025 as compared to $100.9 million for the third quarter of 2024, reflecting a modest decrease compared to the same period in 2024.

Adjusted EBITDA versus the same period last year was supported by a strong performance in the Experiential Services segment driven by strong demand and execution;

however, broader macroeconomic headwinds continued to impact our Branded and Retailer Services segments negatively.

Non-GAAP Financial Measures

In the accompanying analysis of financial results, we include certain financial measures that are not presented in accordance with U.S.

generally accepted accounting principles (“GAAP”).

These non-GAAP financial measures are derived from our consolidated and segment financial information but exclude or adjust for certain items that are included in the most directly comparable GAAP measures.

We believe these non-GAAP (“Non-GAAP”) financial measures provide investors with additional insight into our operating performance, underlying business trends, and period-over-period comparability.

However, these measures are not in accordance with GAAP, and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure is provided below:

• Adjusted Net Income

• Adjusted EBITDA from Continuing Operations

• Adjusted EBITDA by Segment

We define Adjusted Net Income, which is a non-GAAP financial measure, as net (loss) income before (i) net income attributable to noncontrolling interest, (ii) impairment of goodwill and indefinite-lived assets, (iii) gain on deconsolidation of subsidiaries, (iv) equity-based compensation of Karman Topco L.P., (v) changes in fair value of warrant liability, (vi) fair value adjustments of contingent consideration related to acquisitions, (vii) acquisition and divestiture related expenses, (viii) restructuring expenses, (ix) reorganization expenses, (x) litigation expenses, (xi) amortization of intangible assets, (xii) gain on repurchases of Term Loan Facility and Notes (as such terms are defined below) debt, (xiii) COVID-19 benefits received, (xiv) costs associated with (recovery from) the Take 5 Matter, (xv) other adjustments that management believes are helpful in evaluating our operating performance, and (xvi) related tax adjustments.

We present Adjusted Net Income because we use it as a supplemental measure to evaluate the performance of our business in a way that also considers our ability to generate profit without the impact of items that we do not believe are indicative of our operating performance or are unusual or infrequent in nature and aid in the comparability of our performance from period to period.

Adjusted Net Income should not be considered as an alternative for Net (loss) income, our most directly comparable measure presented on a GAAP basis.

Adjusted EBITDA from Continuing Operations and Adjusted EBITDA by Segment are supplemental non-GAAP financial measures of our operating performance.

Adjusted EBITDA from Continuing Operations means net (loss) income before (i) interest expense (net), (ii) provision for (benefit from) income taxes, (iii) depreciation, (iv) amortization of intangible assets, (v) impairment of goodwill, (vi) changes in fair value of warrant liability, (vii) stock-based compensation expense, (viii) equity-based compensation of Karman Topco L.P., (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition and divestiture related expenses, (xi) (gain) loss on divestiture, (xii) restructuring expenses, (xiii) reorganization expenses, (xiv) litigation expenses (recovery), (xv) COVID-19 benefits received, (xvi) costs associated with (recovery from) the Take 5 Matter, (xvii) EBITDA for economic interests in investments and (xviii) other adjustments that management believes are helpful in evaluating our operating performance.

Adjusted EBITDA by Segment means, with respect to each segment, operating income (loss) from continuing operations before (i) depreciation, (ii) amortization of intangible assets, (iii) impairment of goodwill, (iv) stock based compensation expense, (v) equity-based compensation of Karman Topco L.P., (vi) fair value adjustments of contingent consideration related to acquisitions, (vii) acquisition and divestiture related expenses, (viii) restructuring expenses, (ix) reorganization expenses, (x) litigation expenses (recovery), (xi) COVID-19 benefits received, (xii) costs associated with (recovery from) the Take 5 Matter, (xiii) EBITDA for economic interests in investments and (xiv) other adjustments that management believes are helpful in evaluating our operating performance, in each case, attributable to such segment.

We present Adjusted EBITDA from Continuing Operations and Adjusted EBITDA by Segment because they are key operating measures used by us to assess our financial performance.

These measures adjust for items that we believe do not reflect the ongoing operating performance of our business, such as certain non-cash items, unusual or infrequent items or items that change from period to period without any material relevance to our operating performance.

We evaluate these measures in conjunction with our results according to GAAP because we believe they provide a more complete understanding of factors and trends affecting our business than GAAP measures alone.

Furthermore, the agreements governing our indebtedness contain covenants and other tests based on measures substantially similar to Adjusted EBITDA from Continuing Operations.

Neither Adjusted EBITDA from Continuing Operations nor Adjusted EBITDA by Segment should be considered as an alternative for Net (loss) income or operating income (loss), our most directly comparable measures presented on a GAAP basis.

Non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures.

Additionally, other companies may calculate non-GAAP measures differently, or may use other measures to

calculate their financial performance, and therefore our non-GAAP measures may not be directly comparable to similarly titled measures of other companies.

Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

The following table sets forth items derived from the Company’s consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024 in dollars and as a percentage of total revenues.

Three Months Ended September 30,

Nine Months Ended September 30,

Adjusted EBITDA

(1) Adjusted Net Loss and Adjusted EBITDA are financial measures that are not calculated in accordance with GAAP.

For a discussion of our presentation of Adjusted Net Loss and Adjusted EBITDA and reconciliations of Net loss to Adjusted Net Loss and Adjusted EBITDA, see “ Non-GAAP Financial Measures .”

In the first quarter of 2026, revenues were $869.6 million, which represented a $47.8 million or 5.8% increase as compared to the same period last year.

Reimbursable expenses accounted for $20.0 million or 2.4% of the increase with the remaining increase driven by growth in Experiential and Retailer services of $49.4 million and $8.1 million, respectively, partially offset by declines in Branded of $30.7 million.

We reported a net loss of $71.8 million in the first quarter of 2026, compared to a net loss of $56.1 million during the same period last year.

The $15.7 million increase in net loss occurred despite a year-over-year improvement in operating performance, and was driven by two non-operating items:

$20.4 million of third-party debt issuance costs related to the refinancing completed during the quarter, and a $16.2 million increase in income tax expense.

We generated operating income of $18.8 million in the first quarter of 2026, compared to an operating loss in the prior year period.

The improvement reflected stronger results in Experiential Services, improvement in Retailer Services, and lower reorganization and restructuring costs, partially offset by weaker performance in Branded Services driven by lower revenues.

Adjusted EBITDA was $67.7 million for the first quarter of 2026 as compared to $58.2 million for the first quarter of 2025, reflecting an increase compared to the same period in 2025.

The year‑over‑year increase was driven primarily by strong performance in our Experiential Services segment, reflecting continued client demand and effective execution, as well as the timing of certain holidays during the first quarter of 2026 relative to the prior‑year period in our Retailer Services segment.

These improvements were partially offset by macroeconomic headwinds and client losses that impacted our Branded Services segment.

Results of Operations for the Three Months Ended March 31, 2026 and 2025

The following table sets forth items derived from the Company’s consolidated statements of operations for the three months ended March 31, 2026 and 2025 in dollars and as a percentage of total revenues.

Three Months Ended March 31,

(amounts in thousands)

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Selling, general, and administrative expenses

Impairment of goodwill

Depreciation and amortization

Income from equity method investments

Gain on divestiture

Gain on divestiture and income from investments in European joint venture

Total operating expenses

Operating income (loss) from continuing operations

Other expenses:

Change in fair value of warrant liability

Operating income (loss)

Other expenses (income):

Interest expense, net

Income from unconsolidated investments

Other expense, including debt fees

Total other expenses

Income (loss) from continuing operations before benefit from income taxes

Benefit from income taxes from continuing operations

Net income (loss) from continuing operations

Loss before income tax expense

Income tax expense

Other Financial Data

Adjusted Net Income (1)

Adjusted EBITDA from Continuing Operations (1)

Comparison of the Three Months Ended September 30, 2025 and 2024

Three Months Ended September 30,

(amounts in thousands)

Branded Services

Experiential Services

Retailer Services

Total revenues

Branded Services segment revenues decreased $42.6 million for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

The decrease includes a $17.3 million reduction in revenues from reimbursable expenses.

Excluding the impact of reimbursable expenses, the decline was primarily attributable to lower volumes, client losses and reductions in scope of services, which exceeded new business wins.

These trends reflect continued macroeconomic uncertainty, as clients continue to manage their brand support spending with heightened scrutiny during the period.

Experiential Services segment revenues increased $35.0 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

The increase includes $11.3 million of additional revenues from reimbursable expenses.

Excluding the impact of reimbursable expenses, the remaining increase was primarily driven by higher event volume on improved demand, enhanced staffing levels, favorable client and service mix, and higher average pricing, reflecting continued recovery and growth in client activation activity.

Retailer Services segment revenues decreased $16.7 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

The decrease was primarily driven by lower volumes in our existing client base, partially offset by better pricing.

Cost of Revenues

Cost of revenues as a percentage of revenues for the three months ended September 30, 2025 was 84.9%, as compared to 84.6% for the three months ended September 30, 2024.

The net increase as a percentage of revenues was primarily attributable to an increase in variable labor costs, partially offset by lower fixed labor costs, driven by prior period restructuring events, and lower discretionary bonus.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses as a percentage of revenues for the three months ended September 30, 2025 was 6.3%, compared to 10.5% for the three months ended September 30, 2024.

The decrease as a percentage of revenues was primarily driven by lower restructuring costs, reimbursement of $5.0 million of COVID-19 eligible expenses incurred in prior periods, and lower compensation costs, partially offset by higher technology spend.

Depreciation and Amortization Expense

Depreciation and amortization expense was $50.7 million for the three months ended September 30, 2025 compared to $51.9 million for the three months ended September 30, 2024.

The net decrease was primarily due to a $1.6 million decrease in amortization expense resulting from intangible asset impairment charges incurred in fiscal year 2024, partially offset by a $0.3 million increase in depreciation expense as a result of an increase in software amortization on increased investment in software, primarily due to the implementation of our new global enterprise resource planning system.

Operating (Loss) Income from Continuing Operations

Three Months Ended September 30,

(amounts in thousands)

Branded Services

Experiential Services

Retailer Services

Total operating income (loss) from continuing operations

In the Branded Services segment, the transition from operating loss to operating income during the three months ended September 30, 2025 as compared to the same period in the prior year was primarily due to an $8.5 million gain on the divestiture of our 7.5% equity method investment in a foodservices business, lower operating costs, partially offset by lower earnings on decreased revenues, as discussed above.

The improvement in operating expenses was primarily in reduced payroll, lower restructuring and reorganization expenses, and lower incentives.

In the Experiential Services segment, the increase in operating income during the three months ended September 30, 2025 as compared to the same period in the prior year was due to the increase in revenues as discussed above, as well as lower restructuring and reorganization costs and the result of cost reduction efforts, including reductions in payroll-related and other indirect expenses.

In the Retailer Services segment, the increase in operating income during the three months ended September 30, 2025 as compared to the same period in the prior year was primarily driven by lower restructuring and reorganization costs, and favorable cost management actions partially offset by the decrease in revenues as discussed above.

Interest Expense, net

Interest expense, net decreased by $4.0 million, or 10.3%, to $35.0 million for the three months ended September 30, 2025, from $39.0 million for the three months ended September 30, 2024.

The decrease in interest expense was primarily due to lower interest rates and lower debt balance as a result of repurchases of debt associated with the Term Loan Facility and Notes as further described in “ Liquidity and Capital Resources—Repurchases of Shares and Debt—Repurchases of Term Loan Facility and Notes.

” The decrease was also due to a decrease in fair value adjustments for our derivative financial instruments, partially offset by gains on the repurchase of Notes during the three months ended September 30, 2024, which did not recur during the three months ended September 30, 2025.

Benefit from Income Taxes

The Company recognized a benefit from income taxes of $15.3 million and $4.9 million for the three months ended September 30, 2025 and 2024, respectively.

Although the Company generated pretax income from continuing operations during the 2025 period, the effective tax rate reflected a tax benefit driven by the release of the valuation allowance on interest expense carryforwards resulting from OBBB.

Net Income (Loss) from Continuing Operations

Net income from continuing operations was $20.6 million for the three months ended September 30, 2025, compared to net loss from continuing operations of $37.3 million for the three months ended September 30, 2024.

The improvement from a net loss to net income was primarily driven by lower restructuring costs, reimbursement of $5.0 million of COVID-19 eligible expenses incurred in prior periods, and lower compensation costs, partially offset by higher technology spend.

Further contributing to the improvement was lower interest expense, higher income tax benefit and an $8.5 million gain on the divestiture of our 7.5% equity method investment in a foodservices business during the three months ended September 30, 2025.

Comparison of the Nine Months Ended September 30, 2025 and 2024

Nine Months Ended September 30,

Adjusted Net Loss (1)

Adjusted EBITDA (1)

Comparison of the Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31,

(amounts in thousands)

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Total revenues

Branded Services segment revenues decreased $108.9 million during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.

Branded Services segment revenues decreased $32.8 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

The decrease includes a $2.1 million reduction in revenues from reimbursable expenses.

Excluding the impact of reimbursable expenses, the decline was primarily attributable to lower volumes, client losses and reductions in scope of services, which exceeded new business wins.

Excluding the impact of reimbursable expenses, the decline was primarily attributable to lower volumes, client losses experienced in 2025 and reductions in scope of services, which exceeded new business wins.

These trends reflect continued macroeconomic uncertainty, as clients continue to manage their brand support spending with heightened scrutiny during the period.

Experiential Services segment revenues increased $69.8 million during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.

The increase includes $37.0 million of additional revenues from reimbursable expenses.

Retailer Services segment revenues decreased $24.5 million during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.

The decrease in revenues was primarily driven by lower volumes in our existing client base, partially offset by better pricing.

Experiential Services segment revenues increased $71.5 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

The increase includes $22.1 million of additional revenues from

reimbursable expenses.

Excluding the impact of reimbursable expenses, the remaining increase was primarily driven by higher event volume on improved demand and higher average pricing, reflecting continued recovery and growth in client activation activity.

Retailer Services segment revenues increased $9.2 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

The increase was driven primarily by higher product volumes due, in part, to the timing of certain holidays during the first quarter of 2026 relative to the prior‑year period.

Cost of Revenues

Cost of revenues as a percentage of revenues remained substantially consistent at 86.0% for the nine months ended September 30, 2025, as compared to 85.9% for the nine months ended September 30, 2024.

Cost of revenues as a percentage of revenues for the three months ended March 31, 2026 was 87.6%, as compared to 87.9% for the three months ended March 31, 2025.

The decrease was driven primarily by lower fixed labor costs resulting from restructuring actions implemented in prior periods, as well as reduced discretionary bonus and professional services expenses.

These favorable impacts were partially offset by higher variable labor and employee benefits costs

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses as a percentage of revenues for the nine months ended September 30, 2025 was 7.3%, compared to 9.4% for the nine months ended September 30, 2024.

The decrease as a percentage of revenues was primarily due to lower restructuring and reorganization expenses, reimbursement of $5.7 million of

COVID-19 eligible expenses incurred in prior periods, lower compensation costs, partially offset by higher technology spend and an increase in bad debt expense.

Selling, general, and administrative expenses as a percentage of revenues for the three months ended March 31, 2026 was 6.1%, compared to 7.9% for the three months ended March 31, 2025.

The decrease as a percentage of revenue was primarily driven by lower compensation costs and lower stock-based compensation expense.

Depreciation and Amortization Expense

Depreciation and amortization expense was materially consistent at $151.8 million for the nine months ended September 30, 2025, compared to $152.9 million for the nine months ended September 30, 2024.

The decrease is primarily due to a $4.2 million decrease in amortization expense resulting from intangible asset impairment charges incurred in fiscal year 2024, partially offset by a $3.1 million increase in depreciation expense as a result of an increase in software amortization on increased investment in software, primarily due to the implementation of our new global enterprise resource planning system.

Operating Income (Loss) from Continuing Operations

Nine Months Ended September 30,

Depreciation and amortization expense was $51.6 million for the three months ended March 31, 2026 compared to $50.4 million for the three months ended March 31, 2025.

The net increase was primarily due to a $1.8 million increase in depreciation expense as a result of an increase in software amortization on increased investment in software, primarily due to the implementation of our new global enterprise resource planning system, partially offset by a $0.6 million decrease in intangible asset amortization expense.

Operating Income (Loss)

Three Months Ended March 31,

(amounts in thousands)

2 unchanged sentences

Retailer Services

Total operating income (loss) from continuing operations

In the Branded Services segment, the decrease in operating loss during the nine months ended September 30, 2025 as compared to the same period in the prior year was primarily due to a $99.7 million non-cash goodwill impairment charge during the nine months ended September 30, 2024, an $8.5 million gain on the divestiture of our 7.5% equity method investment in a foodservices business during the three months ended September 30, 2025, lower operating expenses, partially offset by lower earnings on decreased revenues, as discussed above, and higher bad debt expense.

The improvement in operating expenses was primarily in reduced payroll, lower restructuring and reorganization expenses, and lower incentive compensation.

In the Experiential Services segment, the increase in operating income during the nine months ended September 30, 2025 as compared to the same period in the prior year was primarily driven by the increase in revenues, discussed above, lower restructuring and reorganization expenses, partially offset by higher compensation and staff recruiting expenses.

In the Retailer Services segment, the increase in operating income for the nine months ended September 30, 2025 was primarily due to cost management actions and workforce optimization efforts that reduced part-time labor and discretionary spending, partially offset by the decrease in revenues as discussed above and increased compensation costs.

Total operating income (loss)

In the Branded Services segment, the increase in operating loss during the three months ended March 31, 2026 as compared to the same period in the prior year was primarily due to lower revenues, as discussed above, partially offset by lower operating costs, primarily due to lower stock-based compensation expense, lower restructuring and reorganization expense, and a decrease in expected credit loss expense.

In the Experiential Services segment, the improvement from operating loss to operating income during the three months ended March 31, 2026 as compared to the same period in the prior year was primarily due to the increase in revenues as discussed above, as well as lower restructuring and reorganization costs and lower stock-based compensation expense.

In the Retailer Services segment, the increase in operating income during the three months ended March 31, 2026 as compared to the same period in the prior year was primarily due to the increase in revenues as discussed above, as well as lower restructuring and reorganization costs and lower stock-based compensation expense.

Interest Expense, net

Interest expense, net decreased by $9.4 million, or 8.2%, to $105.1 million for the nine months ended September 30, 2025, from $114.5 million for the nine months ended September 30, 2024.

The decrease in interest expense was primarily due to lower interest rates and a lower debt balance as a result of repurchases of Term Loan Facility and Notes as further described in “ Liquidity and Capital Resources—Repurchases of Shares and Debt—Repurchases of Term Loan Facility and Notes.

” The decrease was partially offset by an increase in fair value adjustments for our derivative financial instruments and a decrease in gain on repurchase of Notes during the nine months ended September 30, 2025.

Benefit from Income Taxes

For the nine months ended September 30, 2025 and 2024, the Company recognized a benefit from income taxes of $3.5 million and $38.0 million, respectively.

The year-over-year fluctuation primarily reflects a change in the effective tax rate (i) due to a reduction in pretax loss compared to the prior-year period, (ii) the non-deductible goodwill impairment recognized in 2024, and (iii) the valuation allowance change on interest expense carryforwards under OBBB.

Net Loss from Continuing Operations

Net loss from continuing operations was $66.0 million for the nine months ended September 30, 2025, compared to net loss from continuing operations of $200.5 million for the nine months ended September 30, 2024.

The decrease in net loss from continuing operations was primarily driven by a non-cash goodwill impairment charge of $99.7 million related to our Branded Agencies reporting unit goodwill during the nine months ended September 30, 2024, lower reorganization and restructuring costs, lower interest expense, higher income tax benefit and an $8.5 million gain on the divestiture of our 7.5% equity method investment in a foodservices business during the three months ended September 30, 2025.

Interest expense, net increased by $0.4 million, or 1.3%, to $34.8 million for the three months ended March 31, 2026, from $34.4 million for the three months ended March 31, 2025.

The increase was driven primarily by higher interest rates associated with the refinancing completed during the first quarter of 2026, partially offset by lower average principal balances resulting from principal payments made in connection with the refinancing.

Additional information regarding the debt refinancing is included in “ Liquidity and Capital Resources—Credit Facilities ”

Provision for Income Taxes

The Company recognized provision for income taxes of $23.3 million and $7.1 million for the three months ended March 31, 2026 and 2025, respectively.

The year‑over‑year change primarily reflects an increase in the valuation allowance recorded against deferred tax asset related to interest expense limitation carryforwards during the 2026 period.

Reconciliation of Non-GAAP Financial Measures

Adjusted Net Income

A reconciliation of Adjusted Net Income to Net loss is provided in the following table:

Three Months Ended September 30,

Nine Months Ended September 30,

Non-GAAP Financial Measures

We manage and assess our performance through various means including the use of the financial measures of Adjusted Net Loss, Adjusted EBITDA and Adjusted EBITDA by Segment.

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure is provided below.

These financial measures are not presented in accordance with U.S.

generally accepted accounting principles (“GAAP”).

However, these measures are not in accordance with GAAP, and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.

We define Adjusted Net Loss, which is a non-GAAP financial measure, as net (loss) income before (i) net income attributable to noncontrolling interest, (ii) impairment of goodwill and indefinite-lived assets, (iii) equity-based compensation of Karman Topco L.P., (iv) changes in fair value of warrant liability, (v) acquisition and divestiture related expenses, (vi) restructuring expenses, (vii) reorganization expenses, (viii) litigation expenses, (ix) amortization of intangible assets, (x) gain on repurchases of senior secured notes and Term Loan Facility, (xi) costs associated with (recovery from) with collection efforts involving Take 5 Media Group, (xii) other adjustments that management believes are helpful in evaluating our operating performance, and (xiii) related tax adjustments.

We present Adjusted Net Loss because we use it as a supplemental measure to evaluate the performance of our business in a way that also considers our ability to generate profit without the impact of items that we do not believe are indicative of our operating performance or are unusual or infrequent in nature and aid in the comparability of our performance from period to period.

Adjusted Net Loss should not be considered as an alternative for Net (loss) income, our most directly comparable measure presented on a GAAP basis.

Adjusted EBITDA and Adjusted EBITDA by Segment are supplemental non-GAAP financial measures of our operating performance.

Adjusted EBITDA means net loss before (i) interest expense, net, (ii) income tax expense, (iii) depreciation and amortization of capitalized software, (iv) amortization of intangible assets, (v) changes in fair value of warrant liability, (vi) stock-based compensation expense, (vii) equity-based compensation of Karman Topco L.P., (viii) acquisition and divestiture related expenses, (ix) (gain) loss on divestiture, (x) restructuring expenses, (xi) reorganization expenses, (xii) litigation expenses, (xiii) costs associated with (recovery from) with collection efforts involving Take 5 Media Group, (xiv) EBITDA for economic interests in investments and (xv) other adjustments that management believes are helpful in evaluating our operating performance.

Adjusted EBITDA by Segment means, with respect to each segment, operating income (loss) before (i) depreciation and amortization of capitalized software, (ii) amortization of intangible assets, (iii) impairment of goodwill, (iv) stock based compensation expense, (v) equity-based compensation of Karman Topco L.P., (vi) acquisition and divestiture related expenses, (vii) restructuring expenses, (viii) reorganization expenses, (ix) litigation expenses, (x) costs associated with (recovery from) with collection efforts involving Take 5 Media Group, (xi) EBITDA for economic interests in investments and (xii) other adjustments that management believes are helpful in evaluating our operating performance, in each case, attributable to such segment.

We present Adjusted EBITDA and Adjusted EBITDA by Segment because they are key operating measures used by us to assess our financial performance.

Furthermore, the agreements governing our indebtedness contain covenants and other tests based on measures substantially similar to Adjusted EBITDA.

Neither Adjusted EBITDA nor Adjusted EBITDA by Segment should be considered as an alternative for Net (loss) income or operating income (loss), our most directly comparable measures presented on a GAAP basis.

Additionally, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore our non-GAAP measures may not be directly comparable to similarly titled measures of other companies.

Adjusted Net Loss

A reconciliation of Adjusted Net Loss to Net loss is provided in the following table:

Three Months Ended March 31,

(in thousands)

Net income (loss) from continuing operations

Impairment of goodwill

Gain on divestiture

Financing costs for debt modification

Gain on divestiture from investments in European joint venture

Equity-based compensation of Karman Topco L.P.

Change in fair value of warrant liabilities

Fair value adjustments related to contingent consideration related to acquisitions (b)

Acquisition and divestiture related expenses (c)

Restructuring expenses (d)

Reorganization expenses (e)

Litigation expenses (recoveries) (f)

Amortization of intangible assets (g)

Gain on repurchases of Term Loan Facility and Notes (h)

Costs associated with the Take 5 Matter (i)

Tax adjustments related to non-GAAP adjustments (j)

Adjusted Net Income

Divestiture related expenses (b)

Restructuring expenses (c)

Reorganization expenses (d)

Litigation expenses (e)

Amortization of intangible assets (f)

Gain on repurchases of senior secured notes and Term Loan Facility (g)

Tax adjustments related to non-GAAP adjustments (h)

Adjusted Net Loss

Represents expenses related to equity-based compensation expense associated with grants of Common Series D Units of Karman Topco L.P.

made to one of our equity sponsors.

Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, for the applicable periods.

Represents fees and costs associated with activities related to our acquisitions, divestitures, and related activities, including professional fees, due diligence, and integration activities.

made to one of the Company's private equity sponsors.

Represents fees and costs associated with activities related to our divestitures and related reorganization activities, including professional fees, due diligence, and integration activities.

Restructuring charges, including programs designed to integrate and reduce costs intended to further improve efficiencies in operational activities and align cost structures consistent with revenue levels associated with business changes.

Restructuring expenses include costs associated with the Voluntary Early Retirement Program ("VERP") and employee termination benefits associated with a reduction-in-force and other optimization initiatives.

Represents fees and costs associated with various internal reorganization activities, including professional fees, lease exit costs, severance, and nonrecurring compensation costs.

Represents fees and costs associated with various internal reorganization and transformational activities, including professional fees, lease and other contract exit costs, severance, and nonrecurring compensation costs.

Represents legal settlements, reserves, and expenses that are unusual or infrequent costs associated with our operating activities.

Represents the amortization of intangible assets recorded in connection with the 2014 Topco Acquisition and our other acquisitions.

Represents a gain associated with the repurchases of Noted and Term Loan Facility debt, net of deferred financing fees related to repricing of Term Loan Facility.

For additional information, refer to Note 4—Debt to our unaudited condensed financial statements for the three and nine months ended September 30, 2025 and 2024.

Represents costs associated with collection activities related to the Take 5 Matter, primarily professional fees and other related costs.

Represents the amortization of intangible assets recorded in connection with acquisitions.

Represents a gain associated with the repurchases of senior secured notes and Term Loan Facility, net of deferred financing fees.

Represents the tax provision or benefit associated with the adjustments above, taking into account our applicable tax rates, after excluding adjustments related to items that do not have a related tax impact

Adjusted EBITDA

Reconciliations of Adjusted EBITDA from Continuing Operations to Net income (loss) from continuing operations is provided in the following table:

Continuing Operations

Three Months Ended September 30,

Nine Months Ended September 30,

Reconciliations of Adjusted EBITDA to Net loss are provided in the following table:

Three Months Ended March 31,

(in thousands)

Net income (loss) from continuing operations

Interest expense, net

Benefit from income taxes from continuing operations

Income tax expense

Depreciation and amortization

Impairment of goodwill

Gain on divestiture

Changes in fair value of warrant liability

Gain on divestiture of Investments in European Joint Venture

Other expense, including debt fees

Stock-based compensation expense (a)

Equity-based compensation of Karman Topco L.P.

Fair value adjustments related to contingent consideration (c)

Acquisition and divestiture related expenses (d)

Restructuring expenses (e)

Reorganization expenses (f)

Litigation expenses (recovery) (g)

COVID-19 benefits received (h)

Costs associated with the Take 5 Matter (i)

EBITDA for economic interests in investments (j)

Adjusted EBITDA from Continuing Operations

Divestiture related expenses (c)

Restructuring expenses (d)

Reorganization expenses (e)

Litigation expenses (f)

EBITDA for economic interests in investments (g)

Adjusted EBITDA

Financial information by segment, including a reconciliation of Adjusted EBITDA by Segment to operating income (loss), the closest GAAP financial measure, is provided in the following table:

Branded Services segment

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Operating income (loss)

Operating loss

Depreciation and amortization

Impairment of goodwill

Gain on divestiture

Gain on divestiture of Investments in European Joint Venture

Stock-based compensation expense (a)

Equity-based compensation of Karman Topco L.P.

Fair value adjustments related to contingent consideration (c)

Acquisition and divestiture related expenses (d)

Restructuring expenses (e)

Reorganization expenses (f)

Litigation (recovery) expenses (g)

COVID-19 benefits received (h)

Costs associated with the Take 5 Matter (i)

EBITDA for economic interests in investments (j)

Divestiture related expenses (c)

Restructuring expenses (d)

Reorganization expenses (e)

Litigation expenses (f)

EBITDA for economic interests in investments (g)

Branded Services segment Adjusted EBITDA

Experiential Services segment

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Operating income

Operating income (loss)

Depreciation and amortization

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Equity-based compensation of Karman Topco L.P.

Acquisition and divestiture related expenses (d)

Restructuring expenses (e)

Reorganization expenses (f)

Litigation expenses (g)

COVID-19 benefits received (h)

Divestiture related expenses (c)

Restructuring expenses (d)

Reorganization expenses (e)

Litigation expenses (f)

Experiential Services segment Adjusted EBITDA

Retailer Services segment

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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Equity-based compensation of Karman Topco L.P.

Acquisition and divestiture related expenses (d)

Restructuring expenses (e)

Reorganization expenses (f)

Litigation expenses (recovery) (g)

COVID-19 benefits received (h)

Divestiture related expenses (c)

Restructuring expenses (d)

Reorganization expenses (e)

Litigation expenses (f)

Retailer Services segment Adjusted EBITDA

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Represents expenses related to equity-based compensation expense associated with grants of Common Series D Units of Karman Topco L.P.

made to one of our equity sponsors.

Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, for the applicable periods.

Represents fees and costs associated with activities related to our acquisitions, divestitures, and related activities, including professional fees, due diligence, and integration activities.

Restructuring charges including programs designed to integrate and reduce costs intended to further improve efficiencies in operational activities and align cost structures consistent with revenue levels associated with business changes.

Restructuring expenses include costs associated with the Voluntary Early Retirement Program (“VERP”) and employee termination benefits associated with a reduction-in-force and other optimization initiatives.

Represents fees and costs associated with various internal reorganization activities, including professional fees, lease exit costs, severance, and nonrecurring compensation costs.

made to one of the Company's private equity sponsors.

Represents fees and costs associated with activities related to our divestitures and related reorganization activities, including professional fees, due diligence, and integration activities.

Represents costs associated with the Company’s Digital Operating Model Restructuring Initiative, primarily related to workforce transition activities, including employee rebadging, retention‑related compensation, and other qualifying exit or disposal costs.

Represents costs associated with the Company’s Transformation Strategy, including non‑routine, one‑time expenses incurred in connection with internal reorganization and transformation activities.

Represents legal settlements, reserves, and expenses that are unusual or infrequent costs associated with our operating activities.

Represents benefits received from government grants for COVID-19 relief.

Represents costs associated with collection activities related to the Take 5 Matter, primarily professional fees and other related costs.

Represents additions to reflect our proportional share of Adjusted EBITDA related to our equity method investments and reductions to remove the Adjusted EBITDA related to the minority ownership percentage of the entities that we fully consolidate in our financial statements.

Represents adjustments to reflect the Company’s proportional share of Adjusted EBITDA related to its equity method investments.

For these investments, the adjustment reflects the Company’s proportional share of Adjusted EBITDA rather than reported earnings, consistent with how management evaluates operating performance.

Liquidity and Capital Resources

Our principal sources of liquidity are cash receipts for services performed, and borrowings under the Revolving Credit Facility (as defined below).

Our principal uses of cash are operating expenses, working capital requirements, interest on debt and repayment of debt.

Principal uses of cash used in investing activities includes our enterprise resource planning initiative, which includes upgrading our information system platform.

Our working capital as of September 30, 2025, included $201.1 million of cash and cash equivalents and $635.4 million of accounts receivable, net of allowance for expected credit losses, both of which will be a significant source of ongoing liquidity.

Additionally, as of September 30, 2025, we had the ability to borrow up to $446.3 million under our Revolving Credit Facility after consideration of the borrowing base limitations and outstanding letters of credit.

We expect that internally generated cash and unused availability on our Revolving Credit Facility will be sufficient to support our working capital needs, our fixed payments and other obligations on both a short-term and long-term basis.

A summary of our cash operating, investing and financing activities from continuing operations are shown in the following table:

Nine Months Ended September 30,

Operating cash flow, as supplemented by the divestiture of non-core businesses identified over our transformation period, provides the primary source of cash to fund operating needs and capital expenditures.

Excess cash is used to fund debt repurchases and share repurchases.

Our working capital as of March 31, 2026, included $143.9 million of cash and cash equivalents and $572.6 million of accounts receivable, net of allowance for expected credit losses, both of which will be a significant source of ongoing liquidity.

Additionally, as of March 31, 2026, we had the ability to borrow up to $385.8 million under our 2030 ABL after consideration of the borrowing base limitations and outstanding letters of credit.

We believe our cash on hand, cashflows from operations and current and possible future credit facilities will be sufficient to satisfy our working capital requirements, purchase commitments, interest payments, transformation initiatives, capital expenditures, and other financing requirements for the foreseeable future .

A summary of our cash operating, investing and financing activities are shown in the following table:

Three Months Ended March 31,

(in thousands)

Net cash provided by operating activities

Net cash (used in) provided by investing activities

Net cash provided by (used in) operating activities

Net cash provided by (used in) investing activities

Net cash used in financing activities

1 unchanged sentence

Net change in cash, cash equivalents and restricted cash

Net Cash Used in Operating Activities

Cash flows from operating activities during the nine months ended September 30, 2025 were $15.9 million, representing a decrease of $62.1 million, as compared to the same period in 2024.

The decrease was primarily driven by lower collections on a lower accounts receivable on lower sales, and payments associated with restructuring activities, particularly those related to staff reductions.

Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities from continuing operations during the nine months ended September 30, 2025 primarily consisted of purchases of property and equipment of $28.7 million, primarily driven by investments in software to support the enterprise resource planning initiative, and purchases of investments in unconsolidated affiliates of $3.6 million, partially offset by $18.6 million cash received for the sale of an equity method investment.

Net cash provided by investing activities from continuing operations during the nine months ended September 30, 2024 primarily consisted of the proceeds from divestitures of $275.7 million, partially offset by the purchase of property and equipment of $50.4 million and the purchase of investments in unconsolidated affiliates of $13.9 million.

Net Cash Provided by (Used in) Operating Activities

Cash provided by operating activities during the three months ended March 31, 2026 was $23.7 million compared to cash used in operating activities of $39.6 million during the three months ended March 31, 2025, representing an increase of $63.4 million.

The increase primarily reflects favorable movements in working capital, including lower prepaid expenses and other current assets and a smaller decrease in accrued compensation and benefits.

Operating cash flows for the three months ended March 31, 2026 also benefited from increased collections of accounts receivable on higher sales.

These increases were partially offset by unfavorable changes in our working capital balances, including a larger increase in accounts payable, a decrease in deferred revenue and a decrease in other accrued expenses, which was primarily driven by a decrease in accrued interest payable due to the timing of interest payments at the end of the first quarter of 2026 compared with the fourth quarter of 2025.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities during the three months ended March 31, 2026 primarily consisted of $27.5 million in deferred proceeds from the sale of Jun Group completed in 2025 and $13.4 million cash received for the partial sale of an equity method investment joint venture.

These cash inflows were partially offset by purchases of property and equipment of $11.4 million, primarily driven by investments in software, including our enterprise resource planning systems, and purchases of investments in unconsolidated affiliates of $2.0 million.

Net cash used in investing activities during the three months ended March 31, 2025 primarily consisted of the purchase of property and equipment of $15.1 million, primarily driven by investments in software, including our enterprise resource planning systems, which includes upgrading our information system platform, and the purchase of investments in unconsolidated affiliates of $3.3 million.

Net Cash Used in Financing Activities

Cash flows used in financing activities from continuing operations during the nine months ended September 30, 2025 were primarily related to repurchases of Notes and Term Loan Facility debt of $18.2 million, repayment of principal on our Term Loan Facility of $9.9 million and payments for taxes related to net share settlement of $3.7 million.

Cash flows used in financing activities from continuing operations during the nine months ended September 30, 2024 were primarily related to repurchases of Notes of $147.1 million, repayment of principal on our Term Loan

Facility of $9.9 million, payments of contingent consideration of $5.7 million, payments for taxes related to net share settlement of $11.7 million and payments related to the share repurchase program of $34.1 million.

Cash flows used in financing activities during the three months ended March 31, 2026 were primarily related to $124.9 million for repayment of the 6.5% Senior Secured Notes (as defined below) and First Term Loan Facility (as

defined below) debt in connection with the Refinancing (as defined below), $13.7 million payment of deferred financing fees in connection with the Refinancing (as defined below), $6.5 million quarterly principal payment for the 2026 Term Loan Facility (as defined below), and $2.3 million for payments related to the share repurchase program.

Cash flows used in financing activities during the three months ended March 31, 2025 were primarily related to repurchases of Notes of $18.2 million, repayment of principal on our Term Loan Facility of $3.3 million, payments for taxes related to net share settlement of $0.7 million, payments for taxes related to share settlement under the 2020 Incentive Award Plan and payments related to the share repurchase program of $0.9 million.

Credit Facilities

Advantage Sales & Marketing Inc.

(the “Borrower”), our indirect wholly-owned subsidiary, has (i) a senior secured asset-based revolving credit facility in an aggregate principal amount of up to $500.0 million, subject to borrowing base capacity (as may be amended from time to time, the “Revolving Credit Facility”) and (ii) a secured first lien term loan credit facility in an aggregate principal amount of $1.1 billion (as may be amended from time to time, the “Term Loan Facility” and together with the Revolving Credit Facility, the “Senior Secured Credit Facilities”).

As of September 30, 2025, we had unused capacity under our Revolving Credit Facility of $446.3 million, after consideration of the borrowing base limitations and outstanding letters of credit of $53.7 million.

On October 28, 2020, we issued $775.0 million aggregate principal amount of 6.50% Senior Secured Notes due 2028 (the “Notes”) and may voluntarily prepay loans or reduce commitments under the Notes, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty.

We voluntarily repurchased an aggregate of $20.0 million principal amount of the Notes during the nine months ended September 30, 2025 and recognized a gain on the repurchase of $1.8 million, as a component of “Interest expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

We did not make any voluntary repurchases during the three months ended September 30, 2025.

During the first quarter of 2026, we completed a refinancing transaction (the “Refinancing”) designed to extend maturities and modify our capital structure, which is more fully described in Note 4— Debt to the condensed consolidated financial statements.

As of March 31, 2026, we had $385.8 million of unused availability under the revolving credit facility after giving effect to borrowing base limitations and $62.0 million of outstanding letters of credit.

From time to time, we may repurchase portions of our outstanding indebtedness under the 2030 Term Loan Facility and 2030 Notes.

6 unchanged sentences

The timing and amount of any share repurchase is subject to prevailing market conditions, relevant securities laws and other considerations, and we are under no obligation to repurchase any specific number of shares.

During the three months ended March 31, 2026, we executed open market purchases of $2.3 million of our Class A common stock under the 2021 Share Repurchase Program.

During the three months ended March 31, 2026, we retired 566,408 treasury shares that had been previously purchased under the 2021 Share Repurchase Program.

As of March 31, 2026, there remained $43.8 million of share repurchase availability under the 2021 Share Repurchase Program.

Future Cash Requirement

There were no material changes to our contractual future cash requirements from those disclosed in our 2024 Annual Report.

Other than the extension of debt maturities resulting from the Refinancing and an increase in required quarterly principal payments under the 2030 Term Loan Facility to approximately $6.5 million from $3.3 million under the First Term Loan Facility, there were no material changes to our contractual future cash requirements from those disclosed in our 2025 Annual Report.

Cash and Cash Equivalents Held Outside the United States

As of September 30, 2025 and December 31, 2024, $37.6 million and $65.0 million, respectively, of our cash and cash equivalents were held by foreign subsidiaries.

As of September 30, 2025, and December 31, 2024, $34.0 million and $18.5 million, respectively, of our cash and cash equivalents were held by foreign branches.

As of March 31, 2026 and December 31, 2025, $2.2 million and $14.0 million, respectively, of our cash and cash equivalents were held by foreign subsidiaries.

As of March 31, 2026, and December 31, 2025, $68.1 million and $37.9 million, respectively, of our cash and cash equivalents were held by foreign branches.

We expect existing domestic cash and cash flows from operations to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities, such as debt repayment and capital expenditures, for at least the next 12 months and thereafter for the foreseeable future.

Nonetheless, we assessed our determination as to our indefinite reinvestment intent for certain of our foreign subsidiaries and branches and recorded a deferred tax liability of approximately $0.9 million of withholding tax as of September 30, 2025 for unremitted earnings in Canada repatriated to the U.S.

in the second quarter of fiscal year 2025.

We continue to assert indefinite reinvestment

on earnings of our foreign operations, other than Canada although we may change our assertion if we identify a higher return on this capital in the U.S.

Nonetheless, we assessed our determination as to our indefinite reinvestment intent for certain of our foreign subsidiaries and branches and recorded a deferred tax liability of approximately $1.7 million of withholding tax as of March 31, 2026 for unremitted earnings in

We continue to assert indefinite reinvestment on earnings of our foreign operations, other than Canada and the United Kingdom.

No deferred tax liability is required for the United Kingdom unremitted earnings.

However, we may change our assertion if we identify a higher return on this capital in the U.S.

and we are able to repatriate the income in a tax-efficient means.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets or any obligation arising out of a material variable interest in an unconsolidated entity.

We do not have any majority-owned subsidiaries that are not included in our condensed consolidated financial statements.

Additionally, we do not have an interest in, or relationships with, any special-purpose entities.

The Company does not have any off‑balance‑sheet financing arrangements or liabilities, including guarantee contracts, retained or contingent interests in transferred assets, or obligations arising from material variable interests in unconsolidated entities that would require disclosure under applicable accounting guidance.

The Company does not have any majority‑owned subsidiaries that are not included in its condensed consolidated financial statements and does not have material interests in, or relationships with, special‑purpose entities.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are included in our 2024 Annual Report and did not materially change during the nine months ended September 30, 2025.

Our critical accounting policies and estimates are included in our 2025 Annual Report and did not materially change during the three months ended March 31, 2026.

Recently Issued Accounting Pronouncements

Accounting Standards Recently Issued but Not Yet Adopted by the Company

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires entities to expand their existing income tax disclosures, specifically related to the rate reconciliation and income taxes paid.

The standard is effective for our annual report for fiscal year 2025.

The new standard is expected to be applied prospectively, but retrospective application is permitted.

The adoption of this update is expected to impact only the Company’s disclosures and is not expected to have a material impact on the consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

2 unchanged sentences

ASU 2024-03 requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis.

ASU 2024-03, as clarified by ASU 2025-01, is effective for us beginning in fiscal year 2026 and interim periods within fiscal year 2027, with early adoption permitted.

The new standard is expected to be applied prospectively, but retrospective application is permitted.

We are currently evaluating the impact of ASU 2024-03 on the consolidated financial statements and related disclosures.

ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted on a prospective or retrospective basis.

The Company is currently evaluating the impact of ASU 2024-03 on the consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

2 unchanged sentences

ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted and application on a prospective, modified retrospective, or retrospective basis.

The Company is currently evaluating the impact of ASU 2025-06 on its consolidated financial statements and related disclosures.

Other new accounting pronouncements recently issued or newly effective were not applicable to us, did not have a material impact on our condensed consolidated financial statements or are not expected to have a material impact on our condensed consolidated financial statements.

The Company is currently evaluating the impact of ASU 2025-06 on the consolidated financial statements and related disclosures.

Other new accounting pronouncements recently issued or newly effective were not applicable to the Company, did not have a material impact on the condensed consolidated financial statements or are not expected to have a material impact on the condensed consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis